Which of the following best describes a smart card?

A smart card is best described as a small electronic device that contains both memory and circuitry. This technology integrates a microprocessor or memory chip, which allows it to securely store and process data. Smart cards can be used for various applications, including identification, payment processing, and access control. Their design enables secure communication with card readers, making them versatile and widely used in fields like banking, healthcare, and security.

The other options do not accurately characterize a smart card. A large storage disk refers to traditional storage media, not portable or contactless devices. An advanced mobile application for payments describes software solutions for handling transactions, rather than a physical card. A physical key used for encryption suggests a different type of security device, such as a USB token or hardware security module, rather than a smart card with its own processing capabilities and memory.